Published on 3/07/2017 1:34:33 PM | Source: Aashish Sommaiyaa
21st Century Leader: An interview with Mr. Aashish Sommaiyaa
Aashish Sommaiyaa, Managing Director & CEO of Motilal Oswal Mutual Fund in a candid discussion with our editorial team and sharing his thoughts on what it takes to lead in 21st century.
Q1. Aashish, thank you for your time, Firstly our viewers would like to know that Motilal Oswal group is known for its Broking business so how has been the journey so far in Mutual Fund business?
Motilal Oswal has been into equity fund management since 2003 by way of its PMS license. We now have 14 years track record of managing PMS for high networth investors and with about Rs 12,000 crs we are probably the largest domestic discretionary PMS provider in the country. With this track record of implementing our time tested BUY RIGHT : SIT TIGHT investing philosophy we first started offering actively managed equity funds in 2013 and as we speak today we manage in excess of Rs 11,000 crs in these equity funds.
It has been an excellent journey so far where we have been able to establish ourselves as a highly differentiated niche equity fund management company as opposed to the super-market approach of the larger asset management industry in India. We have diligently practiced our well-defined investing philosophy of businesses with Quality – Growth – Longevity – bought at a fair Price.
Our flagship multicap fund MOSt Focused MultiCap 35 was launched in April 2014 and it has the unique distinction of being the fastest to double investors’ money in the last 3 years. (Source: Economic Times dated June 22, 2017).
Lastly, I am very proud to share that our promoters, our group companies and my AMC has totally over Rs 2,200 crs of our own proprietary capital invested into our MF schemes. This shows our sincerity and complete alignment of interest.
Q2. Interesting times, few years back Mutual funds were only sold through partner channels like banks & brokers how are you breaking this mindset and exploiting new platforms?
I personally feel that there is bound to be an explosion in alternative channels of distribution as far as mutual funds are concerned.
We are lucky to be in a time and space where there is simultaneous disruption happening in 1) investing habits which change over generations 2) interest rate paradigms 3) telecom connectivity and data explosion 4) digital and cashless society – mutual funds and capital market products have been cashless and digital for two decades now at least.
I don’t think we need to work too hard to change nor are there any mind-sets that we are fighting. There are some people who were traditional investors, they will be adapting to mutual funds and capital market products and there are experienced mutual fund and capital market participants who will be adapting to new channels of accessing products. Unless one is a new investor in the 20-30 age bracket it’s hard to imagine that someone who have never invested in mutual funds or capital markets will straight away make their first move on a digital channel. While I am sure that is also happening, I am not in a hurry to imagine that everyone who buys a mobile phone or a book online will buy their first equity fund also online. Digitally savvy should not be extrapolated to mean financially savvy nor should we assume vice versa. To that extent segmentation of customers and relevance of creating right reach can’t be undermined.
Q3. Mutual Funds are one of the highly regulated products, as leader how do you manage to be innovative and creative and yet maintain the boundaries of the regulations?
Great question, that’s the challenge for every leader. Innovation within the bounds of regulation does get constraining at times and prevents any moats from being created but on the other hand rules are the same for everyone and regulation also means that much less probability of being leap-frogged over by something totally unexpected. But my industry is at an interesting stage and from marketing and strategic thinking perspective I think it has some way to go before it looks like an evolved sophisticated landscape. I believe that in business we don’t have to be better than anyone because the best can be bettered, we have to be unique. For now, being contrarian and challenging existing industry norms, being focused and competency centric itself is acting as differentiation.
Q4. While Motilal Oswal Mutual Fund AUM’s are growing fast however how to you intend to increase your market penetration and share of wallet?
I believe a lot more in share of wallet and depth of relationships than breadth or market penetration. And I focus a lot more on depth because of two reasons:
1. My industry is guilty of launching too many me-too products which serve no purpose in clients’ portfolios. If you look at equity mutual funds, at some level you need to realize that in order to buy some 200 odd businesses that are worth investing in the stock market, we have created some 500 plus equity funds.
2. My experience tells me that an average equity mutual fund investor has 6-7 equity schemes in the portfolio and some have even 10 equity schemes in their portfolios. If you have 10 equity schemes in your portfolio and each one has 50-60 stocks, after adding up all and de-duplicating all holdings you are still likely to be left with 250-300 holdings. BSE 200 is around 80%-85% of our total market capitalization. If you buy the market you can’t beat the market. We are a highly focused investor with very few schemes and average 20 odd stocks per scheme. Our entire belief is that we should add alpha to our clients, not detract from it. Hence, I’d rather be a material money manager who adds alpha into whatever client portfolios I am present in rather than being a marginal allocation in every client’s portfolio.
Q5. Our viewers would like to know that as a successful Business Leader what is your mantra for Success? What is the key to be a successful leader?
The most crucial rule for any businessman is never to offer something the he or she wouldn’t consume himself or herself. Read it long back – “never become salesman of a product you wouldn’t sell to your grandmother”! So this is about doing something that you have conviction in and that you believe in. If you are not convinced I don’t think you can go too far with the dissonance you would be carrying within you. This one single rule encompasses all aspects of the quality of product, its delivery and its relevance to the chosen consumer segment.
Apart from this I think transparency and honesty through quality and consistency of communication with all stake holders is important for any leader. Lastly, specifically for my business – humility is very crucial; capital market investors specifically and all capital market participants in general are known to confuse brains for a bull market or lack of brains for a bear market. Quality of effort in my profession is not decided by outcomes, but by quality and consistency of inputs. Yet, according to me 99% of investors don’t realize that performance is an outcome and chasing the outcome doesn’t assure outcome – understanding the process that goes into creating the outcomes; that is the key!
Q6. While you yourself are role model for many however who are your role models or leaders who have inspired you over the period of time?
I don’t really have any role models but I love reading about management, investing, marketing, communication skills and strategy. I am a product of what I read and to that extent books inspire me by helping me think, evolve and refine frameworks and execute better.
Q7. What would be your advice to young budding talent in corporate world?
Unfortunately lot of advice sounds like a cliché so I am wary of sharing advice. I don’t really think people especially youngsters take advice as is but if I have to share my experiences I would say few things that worked for me. I’d say don’t do something that you don’t enjoy just for the sake of earning a salary. If you enjoy what you do, success will follow. There is a lot written and spoken about diplomacy and political savvy in organizations, I don’t think it works. Talking straight and putting across my view point has always worked for me and as a CEO, I prefer people who talk straight to the point. I personally am not too good at reading between the lines or wrapping what I want to say into subtle layers. Onion peeling can be frustrating! Focus on learning and experiences, be clear what you want to get to but don’t be stuck up about the route you take to get there. I sometimes see youngsters who tell me I don’t want to do this or that, I don’t think I did my CA or MBA to go out on the field or to fix appointments or to answer clients’ queries!
Lastly, while you are free to decide what you like to do, you have to keep an eye on where the market needs talent. Take example of my industry, everyone wants to be a research analyst and fund manager but not many people want to get into investment advisory or consultative selling of financial products to clients. If the industry starts managing Rs 12 lac crores instead of Rs 6 lac crs in equity funds, we won’t need double the number of analysts and fund managers, but we will surely need a lot more investment advisors to handhold clients. All the talented qualified people want to get into a space which is well populated, needs decades of post qualification experience and yet has limited space; but not many want to get into a space with unlimited demand where talent will be a serious differentiator.
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